Summary: Category 04 of crime forms in the ISO program lists sixteen optional crime and fidelity insuring agreement endorsements. Many of these endorsements have been updated in the past two years. The endorsements amend the commercial crime policy and coverage form and/or the government crime policy and coverage form by adding various insuring agreements. The changes to these endorsements are the subject of this treatment.

Each endorsement contains language stating that the provisions of the form or policy that the endorsement is attached to apply unless the endorsement modifies those provisions. This is to clarify that all other policy provisions apply unless specified. This article is broken into three sections as follows:

This endorsement adds to the endorsed policy an insuring agreement to cover "money," "securities," and "other property" that belongs to the named insured's "client". Remember that "client" is a defined term that means anyone for whom the named insured provides services under the terms of a written contract. The client's property is covered for loss from theft by an identified "employee." Although the policy covers the named insured's property for theft by both identified and unidentified employees, this endorsement limits coverage for clients' property to theft by an identified employee.

As in the policy, the employee committing the theft may be acting alone or in collusion with others. While endorsement CR 04 01 requires that the offending employee be identified, it does not require identification of others who may be colluding with the employee.

The Acts Committed By Your Employees, Officials Or Representatives Exclusion of the crime policy excludes loss resulting from theft or any other fraudulent act committed by the insured's employees, officials, or authorized representatives, except when covered under the employee theft insuring agreement. This endorsement amends that exclusion to also add an exception for the insuring agreement of this endorsement. 

The endorsement adds to the Duties In The Event Of Loss Condition that if the insured has reason to believe that any loss involves a violation of law, they must notify local law enforcement. 

A definition for "client" is added meaning any entity to whom the insured provides services under a written contract. "Occurrence" is also added and defined as an individual act; the combined total of all separate acts, whether or not related; and a series of acts, whether or not related; committed by an employee, acting alone or in collusion with other persons. Lastly, the definition of "theft" is modified to mean the unlawful taking of property to the deprivation of the insured's "client."  While the policy says that a theft must be to the deprivation of the named insured, this endorsement changes that to the deprivation of the named insured's client. While an earlier form of endorsement CR 04 01 covers property inside the client's premises, the current endorsement has no such language. Therefore property that the client holds for others is covered on or off the client's premises if it is stolen by an employee. . 

This endorsement may be used with the Government Crime Coverage Form, the Government Crime Policy, and the Government Fidelity and Forgery Policy. The coverage provided by this endorsement has been incorporated into the Commercial Crime Forms. 

Sometimes a business or government entity is threatened by a kidnapper (or someone who purports to be a kidnapper) or other type of extortionist. This person threatens bodily harm to someone at the company (or their relatives). The threat to government entities may be to their officials, employees, or representatives (or relatives). Other threats to a business or government entity involve potential damage to its premises or property. Newer threats involved damage to computer systems by denial of service attacks, introduction of viruses or malicious software, dissemination of the insured's proprietary or confidential information, the confidential information of others, weaknesses in the source code of the computer system, introduction of "ransomware", or even contamination of an insured's products or goods.

Endorsements CR 04 03 and CR 04 04 add an insuring agreement to cover damage from such threats to either commercial entities or government entities. These endorsements are virtually the same, with one applying to commercial forms and the other to government forms. They agree to pay for loss of "money", "securities", or "other property" as a result of threats of bodily injury or property damage.. Extortion threats that are generally considered cyber threats have been removed from the 2022 version of this endorsement, as a Cyber policy would be more appropriate to provide that coverage. 

The Government entities endorsement provides coverage for harm to officials, employees, or representatives, while the commercial form applies to directors, trustees, partners, members, managers, employees, or ERISA plan officials. The commercial endorsement adds coverage for threats to contaminate, pollute or render substandard your products or goods; this does not appear in the CR 04 04 Government Entities form. 

The Kidnap, Random, Extortion and Other Unlawful Demands exclusion of the crime policies is amended to except situations that are covered under the insuring agreement of this endorsement. 

A condition is added where the insured must make a reasonable effort to report an extortionist's demand to local law enforcement before surrendering any property as ransom.

The 2022 revision amends coverage to include loss sustained resulting from an "occurrence" taking place anywhere in the world, except any Territory specifically excluded in the Schedule. 

For purposes of this endorsement, the valuation of "securities" is amended. Instead of their value at the time they were stolen, they are valued at their market value at the time they are surrendered to the extortionist.

Property other than money and securities are valued at no more than its replacement cost value without deduction for depreciation at the time it was surrendered or the limit of insurance.

CR 04 03 can be used with the Commercial Crime Coverage Form and the Commercial Crime Policy. CR 04 04 can be used with the Government Crime Coverage Form and the Government Crime Policy.

 The commercial crime policy limits the inside premises coverage of "other property" to the perils of robbery and safe burglary. This endorsement expands that coverage on "other property" to include the peril of "theft." It also covers damage to the premises that results from theft or attempted theft of "other property". "Other property" is defined in the crime policies as any tangible property other than money and securities that has intrinsic value. It does not include computer programs, electronic data, or any other property specifically excluded.

Property must be inside the premises in order for coverage to apply. "Premises" has the same definition as in other crime coverage forms—the interior of that portion of any building the named insured occupies in conducting its business. Accordingly, all premises that meet this description are automatically covered, even if acquired after policy inception.

 Endorsement CR 04 05 adds seven exclusions to the crime policy:

  1. The insurer will not pay for "loss occurring while there is any change in the condition of the risk within the named insured's control that increases the possibility of loss." For example, if an insured is responsible for maintaining his or her premises including replacing broken windows, and does not do so, there is no coverage if a loss occurs while the windows remain unreplaced.
  2. The endorsement does not cover a loss that results from the giving or surrendering of property in any exchange or purchase. If, for example, the insured gives or surrenders covered property in a fraudulent transaction, the resulting loss is not covered. This exclusion accomplishes much the same result as the exclusion of voluntary parting of the title to property, discussed below.
  3. There is no coverage damage to the "other property" by fire. However, the exclusion does not apply to damage to a safe or vault by fire. There is also an exception for loss from theft that occurs during a fire inside the premises.
  4. Losses that can only be proved by an inventory computation or a profit and loss computation are not covered.This is a common property exclusion. 
  5. This exclusion makes it clear that the endorsement does not cover motor vehicles, trailers, or semi-trailers or equipment and accessories attached to them. There is no coverage for loss or damage to such property. 

The previous exclusion for loss or damage to property after it has been transferred or surrendered to a person outside the "'premises" or "financial institution premises" has been removed from this endorsement. The transfer of property needed to be based on unauthorized instructions or a variety of threats including threats of bodily harm, threat to damage property, threat to introduce virus to computer systems, and other threats.  

  1. Loss from damage to the "premises" or its exterior or to any "other property" by vandalism or malicious mischief is not covered.
  2. Loss resulting from the insured, or anyone acting on their express or implied authority, being induced by any dishonest act to voluntarily part with title to or possession of any property is not covered.

A condition is added that says that after a loss, the coverage is suspended until the security at the premises is restored to its pre-loss condition. However, if the named insured employs a watchperson while the premises are closed, this condition does not apply.

The 2022 revision removes the $5,000 limit for loss of precious metals, precious or semiprecious stones, pearls, furs, manuscripts, and drawings. Consequently, property of that type is now subject to the same limit, deductible, and other terms of coverage as "other property."

This endorsement can be used with the Commercial Crime Coverage Form, the Commercial Crime Policy, the  Government Crime Coverage Form, and the Government Crime Policy. 

The commercial crime policy covers "other property" while inside the premises for the perils of robbery of a "custodian", or safe burglary (taking of the property while it is in a safe or the taking of the safe itself). This endorsement expands that coverage to include robbery of a "watchperson" and "burglary." The commercial crime policy covers damage to the premises done while a custodian is being robbed or during a safe burglary. This endorsement expands that coverage to include damage to the premises during a robbery of a watchperson or burglary.

The form changes the definition of watchperson. While in the policy a watchperson is someone whom the insured hires who has no other responsibility than to care for the covered property, the endorsement now also considers a janitor the insured employs that has care and custody of covered property as a watchperson. The other broadening of coverage is the addition of the peril of burglary. A definition of burglary is also added, meaning the unlawful taking of property from inside the premises by a person unlawfully entering or leaving the premises as evidenced by marks of forcible entry or exit.

Like CR 04 05, the 2022 revision of this endorsement also removes the $5,000 limit for loss of precious metals, precious or semiprecious stones, pearls, furs, manuscripts, and drawings. Property of that type is now subject to the same limit, deductible, and other terms of coverage as "other property."

This endorsement can be used with the Commercial Crime Coverage Form, the Commercial Crime Policy, the  Government Crime Coverage Form, and the Government Crime Policy. 

The commercial crime policy covers "money" and "securities" for theft, disappearance, or destruction while inside the premises. This endorsement expands that coverage to include robbery of a "custodian" and "safe burglary." It provides coverage for damage to the premises or for damage to a locked safe or vault that results from an actual or attempted robbery or safe burglary.

Endorsement CR 04 07 adds these two exclusions:

  1. Loss from fire is not covered. However, it does cover fire loss to money, securities, and damage to a safe or vault.
  2. There is no coverage for damage to the premises or "other property" from vandalism or malicious mischief.

Similar to the CR 04 05, the previous exclusion for loss or damage to property after it has been transferred or surrendered to a person outside the "'premises" or "financial institution premises" has been removed from this endorsement. The transfer of property needed to be based on unauthorized instructions or a variety of threats including threats of bodily harm, threat to damage property, threat to introduce virus to computer systems, and other threats.

This endorsement can be used with the Commercial Crime Coverage Form, the Commercial Crime Policy, the  Government Crime Coverage Form, and the Government Crime Policy. 

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